COMPARATIVE

C ANALYSIS
Airbnb-Oyo-Homeaway

ABHISHEK BITOLIA – 2K18/MBA/2018

ABSTRACT
Comparative analysis is used to determine and quantify relationships
between two or more attributes by observing different groups that either by
choice or circumstances is exposed to different treatments. Comparative
analysis also looks at two or more similar groups, individuals, or conditions by
comparing them.

COMP CCC
Table of Contents
Brian Chesky .................................................................................................................. 6
Airbnb Income Statement ................................................................................................ 9
Business Model of OYO Rooms ...............................................................................11
Aditya Ghosh.............................................................................................................................. 13

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 2

 INTRODUCTION
The hotel industry is the servicing business conducing another significant branch in the
economic development of the country. The hotel industry associates many types of industry,
such as the tourist industry, the transportation industry, and the food servicing industry. It is
apparent that every country emphasizes on the significance of this kind of industry, with a
belief that this is a source for employment, disseminating the income of the country,
conducing the country’s progression, especially the progressing country such as Thailand. It
is accepted that the hotel industry brings a high income to the country. Therefore, the
government sector and the public sector should cooperate in promoting this kind of business.
Whereby, the public sector would make the investment, and the government sector would
support. It is complacent that generally the hotel industry in Thailand is being internationally
accepted, due to the modernization of the hotel and the optimum service. The Thai amiability
to foreigners avails the progression of this kind of business. The Oriental Hotel is an example
of success for Thai Hotel, in receiving the world best hotel award for eight consecutive years.
This enables the image for the Thai hotel business to become in one of the top levels in the
eyes of foreigners.

Presently, various hotels expanded the network and branches, with a belief that the hotel
business is still going well in Thailand, because people are still much interested to make a tour
in this region of the world. Moreover, the booming tourist industry is enchanting people to
put in more investment. These factors would conduce a great income to the country. More
people give better interest in the study of the Hotel Academic. There was the intense
teaching, training, and learning in this subject, to concur with the growth of this business. On
the overall, this is directly advantageous to the hospitality industry. Because administrators
and the operators attained the knowledge in the hotel business administration with a correct
servicing knowledge, this would also be advantageous to other relevant business.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 3

AIRBNB BUSINESS MODEL
Airbnb is a community-based online platform for listing and renting local homes. It connects
hosts and travelers and facilitates the process of renting without owning any rooms itself.
Moreover it cultivates a sharing-economy by allowing property owners to rent out private
flats.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 4

Value Proposition & Customer:
Airbnb is a community-based, two-sided online platform that facilitates the process of
booking private living spaces for travelers. On the one side it enables owners to list their space
and earn rental money. On the other side it provides travelers easy access to renting private
homes. With over 1,500,000 listings in 34,000 cities and 190 countries, its wide coverage
enables travelers to rent private homes all over the world. Personal profiles as well as a rating
and reviewing system provide information about the host and what is on offer. Vice versa,
hosts can choose on their own who to rent out their space to.

Revenue Model
Airbnb receives commissions from two sources upon every booking, namely from the hosts
and guests. For every booking Airbnb charges the guest 6-12% of the booking fee. Moreover
Airbnb charges the host 3% for every successful transaction.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 5

Leadership

Brian Chesky
Co-founder, CEO, Head of Community

Brian Chesky is the co-founder, Head of Community, and CEO of Airbnb, which he started
with Joe Gebbia and Nathan Blecharczyk in 2008. Brian sets the company’s strategy to
connect people to unique travel experiences, and drives Airbnb’s mission to create a world
where anyone can belong anywhere. Originally from New York, Brian graduated from the
Rhode Island School of Design where he received a Bachelor of Fine Arts in Industrial Design.

Airbnb Use these three leadership strategies to find the unmet needs of customers:

1. Pay attention to the changing habits of all consumers.

While it’s essential to understand the unique needs of your specific customers, it’s also
necessary to pay attention to broad social trends affecting consumers at large. Hotel
companies had been making incremental changes to improve the experience of their key
customer segments. But leaders in those organizations underestimated customer desires for
greater personalization and unique offerings. As such, hotels were improving a reasonably
ubiquitous experience (a 325 square foot hotel room in high traffic areas). In contrast, Airbnb
offered diverse, crave-able, shareable places, and experiences.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 6

2. Listen, ideate, try, and do. For
Airbnb’s founders, design education shaped their approach to leadership. Using design
theory, leaders can inspire teams to listen (both with their ears and through observation) for
customer needs, create solutions for those needs, try viable solutions (test and learn) and
deploy the solutions that best serve customer needs. Leaders in innovative companies create
cultures that consistently listen, explore, try out, and implement the best options.
3. Stay restless. Great
business minds like Marshall Goldsmith and Jim Collins have weighed in on the importance of
continually leading change. Goldsmith notes, “What got you here won’t get you there.”
Collins suggests leaders should never see “success virtually as an entitlement,” or they will
“lose sight of the true underlying factors that created success in the first place.” Routinely ask
questions like, “What if? What else might we do? How do we know?” You need to avert
complacency and continually stretch in the direction of a tireless journey to customer
experience excellence.

AIRNBNB FINANCIALS

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 7

Airbnb Loses $276 Million and 6 Other Takeaways From Its Fourth Quarter

Bloomberg reported that it got a look at privately held Airbnb’s fourth quarter financials,
finding that its revenue leaped 32 percent to $1.1 billion partially on the shoulders of
increased marketing spend, but earnings before interest, taxes, depreciation and
amortization (EBITDA) plunged 92.3 percent to a loss of $276.4 million.

Fourth Quarter Financials

Q4 Revenue % Change Q4 Earnings* % Change

Booking Holdings $3.3 billion 3.92% $1.3 billion 2%

Homeaway $2.7 billion 7% $478 million 1%

Airbnb $1.1 billion 32% ($276.4 million) (-92.3%)

Oyo Rooms $335 million -3% $92 million 6%

Source: Bloomberg and public filings

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 8

Airbnb Income Statement

Annual
USD Y, 2010 Y, 2011 Y, 2013 Y, 2014 Y, 2015E Y, 2016 Y, 2017 Y, 2018

Revenu 8.4 52.8 250.0 423.0 900.0 1.5b 2.6b 3.6b

e
m m m m m

Reven 740 529 69% 113% 67% 73% 38%

ue
% %
growth
,%

Sales 1.1b
and
marketi
ng
expens
e

Operati
ng
expens
e total

EBIT (150.0 93.0 18.7

m) m m

EBIT (17%) 4% 1%
margin
,%

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 9

AIRBNB OPERATIONS

Airbnb
Airbnb's headquarters at 888 Brannan Street, in San Francisco, California

Key people Brian Chesky (CEO) Joe Gebbia (CPO) Nathan Blecharczyk (CSO)

Services Lodging Hospitality

Revenue $2.6 billion (2017)

Operating income $450 million (2017)

12 more rows

With the way Airbnb is growing at a rapid rate, mainstream hotel bookings should buckle up
or they’ll face a difficult time competing with the company.

Research conducted by the Morgan Stanley Report shows that over 50% of Airbnb users in
2016 gladly used it to replace a traditional hotel stay. But the race isn’t won yet — Airbnb
needs to up their game by partnering with large companies to accommodate their
employee travel needs as well as attract business travelers.
It’s time to do more with the “Business Travel Ready” listings since approximately 70% of
night bookings for the U.S. lodging industry are business stays. Airbnb is creating a massive
awareness and blazing new trends across the world.

Google search trend shows that Airbnb is already gaining the same attract and frequency as
mainstream travel-book and hotel brands, such as Marriott and Expedia. We can only watch
and see what happens.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 10

OYO Business Model
OYO Business Model used to be a hotel aggregator. The customers used to buy the services
from the brand OYO rooms and didn’t care who the partner was. Just like Uber, OYO provided
rooms with standardized quality and price.
OYO Rooms have a network of hotels that are currently operating in 5,000 cities in India,
Malaysia, UAE, Nepal, China, and Indonesia. OYO started off its operations by building its
business model around the aggregator business model.
Previously, the company is in organizing the partner with hotels, lease some rooms, and sell
them under its own brand. The main focus of the OYO rooms is to provide quality services to
their customers. They make the partners provide services at predetermined standards to
maintain the brand image while they make them more visible to their user-base.
OYO uses an aggregator business model. Aggregator business model is a network business
model in which the firms collect information about a particular industry that is unorganized,
and acquire them as partners and sell their services under OYO’s.

OYO Rooms’ business model is similar to the aggregator business model. OYO has some
essence of the franchise business model also. OYO room organizes those hotel rooms under
their brand name and OYO partner hotels provided standardized service to customers of
those rooms. Bookings of these rooms were made through the OYO’s website and mobile
application.

Now the Oyo rooms have performed some changes in their business model. Now OYO doesn’t
lease the hotel rooms, OYO asks the hotel partners to operate them as a franchise. OYO
boasts a 100% increase in revenue to their partner hotels and they have good brand equity.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 11

Partnership Model:
OYO Rooms provide quality hotel rooms to visitors who stay at different places around India.
They have partnered with hotels and hotels works under their name.

OYO Revenue Model

OYO Rooms is having about 1,200 employees at an average of 25,000 Rs. per month per
employee. That will make about 3 crores per month approximately.OYO is spending a huge
amount on advertising such as online, TV, Radio and other mass media channels and on other
marketing campaigns. TV ads can cost between 30 lacs to 3 crores per advertisement and the
total ad run budget could have been anywhere between 20 to 100 crore. OYO is spending a
large amount of money on online advertising and on Google as well. This will be estimated at
around 1-2 crore per month.

OYO rooms have to face the losses even after providing the hotel’s rooms at such a great
discount. Actually OYO invests his money in market segments to attract the customers. OYO
rooms use both mass media and digital marketing to engage their audience to retain their
customers and to attract new. OYO room has strong social media presence on Facebook,
Twitter, and other social media platforms. This helps OYO to keep their audience engaged
with new offers and campaigns. The bookings can be easily made through the website and
mobile application and in this application customer book rooms at predetermined prices by
Oyo.

OYO LEADERSHIP
COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 12
Aditya Ghosh
CEO- OYO ROOMS
Aditya Ghosh has joined the company’s board of directors after serving as a CEO, India &
South Asia for the company's hotels and homes business for the past year. In that role, he
implemented several programs to strengthen operating metrics and customer experience
and was credited for more than doubling the asset owner community from more than 5,500
to more than 18,000 hotels in a short span of time.

In his new role at the board, Ghosh will focus on five key areas: safety and security, customer
experience, corporate governance, revenue management and stakeholder communications.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 13

OYO FINANCIALS

FY19 Revenue – 4.5x increase in total revenue to USD 951 million, led by India and China

Our consolidated revenue for FY19 stood at USD 951 million, which is 4.5X YoY growth over
FY18.

The fiscal year also marked our transition from an India-centric business to a global
organization.

• Nearly 36.5% or USD 348 million of our fiscal revenues were from outside India. A
year ago, this was a small part of our overall business.
• India contributed nearly 63.5% or USD 604 million of our revenues and we recorded
2.9X YoY growth in the market.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 14

Here is a brief summary of our overall financial results:

Operations of OYO Rooms:

There are many services that are included in the OYO business model. Some of these are-

Hotel Rooms:
OYO’s strategy was to have a partnership with hotels and to maintain it as per the quality
standards for OYO customers and they used to lease some rooms every month and provide
those rooms to their own customers at some profits.

But now OYO has performed some changes in its strategy, change is that the rooms are now
not leased but operated as OYO Rooms franchise. The hotels and place owners are bound to
operate as per the pre-determined standards. The company even offers several plans to
hotels to runs the place instead of the hotel staff or owner.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 15

OYO Flagship:
The partners like to book their own hotels when they see fewer prices on the Oyo’s platform
and this became beneficiary for the partners. To reduce this OYO Rooms has started leasing
hotels and places where OYO has full control over all the day-to-day operations.

OYO Townhouse:
OYO Townhouse is recently launched to hone its value proposition and stand out from the
competition to standardized hospitality. OYO Townhouse is based on millennial traveler
needs and planned and built based on the needs and wants of the millennials.

Smarter Rooms:
Smarter consists of specially designed beds, showers, sockets, and internet
infrastructure. Even TVs have Netflix installed.

Smarter Spaces:
common spaces designed to have meetings. These Places have a free printer,
business services, magazines, coffee, and tea.

Smarter Menus:
24 x 7 Kitchen services that let you order from the mobile application.

Studio Stays:
OYO Rooms also provides fully furnished rooms and flats for long stays like internships,
corporate stays, etc apart from providing the hotels. The rooms/flats can be rented on single
occupancy as well as on twin sharing basis as well. Rents are paid monthly and the
Commission of the rooms is charged from the owners of the customer who comes through
OYO rooms.

Events & Other Long Stays:

There are many family functions such as weddings, parties, etc. as well as corporate functions
such as seminars, meetings, parties, etc. involve hotel rooms for their guests to stay for long,
OYO is also providing these services.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 16

Commercial Places:
OYO has expanded its branches in commercial places as well. Now the OYO has provided the
ease that customers can even book office spaces on OYO as well.

OYO Wizard:

OYO has also launched a subscription model where the subscribers of the OYO get exclusive
discounts, deals, and cashback offers, etc.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 17

HomeAway Business Model
HomeAway had a business model that asked the host, or property owner, to pay a listing fee
to be part of the marketplace. HomeAway had five listing types with different resulting levels
of placement in search results and geographic reach. The business model was basically a
classified ad model adapted to an internet directory. Fairly old school. This business model
likely resulted from how early HomeAway began and how many disparate properties the
company purchased.

HomeAway is transitioning to a commerce-based model closer to Airbnb’s approach, but with

both sides paying fees. Here are some of the key changes:

HomeAway is simplifying (but not eliminating) the property owner’s listing fee. HomeAway
will now offer just one listing plan. (As mentioned above, HomeAway previously had five
subscription listing plans–so many they ran out of precious metals by which to name them!)

HomeAway is saying that the listings will now be presented in the order of a “Best Match”
algorithm–rather than based on the subscription plan the host purchased. It’s a more
“organic” approach. However, the most important factor in the algorithm is whether the
property owner is using HomeAway’s booking tool.

But the biggest change was announced around the time that HomeAway sold to Expedia and
is being implemented now (see my blog post here) . HomeAway decided several months ago
it would add a fee for buyers (travelers) of 5.5-9% to its business model. The Washington Post
article claims that with this buyer fee now in place, some property owners are pushing back
saying the new fee has hurt business. (To be fair, only anecdotal evidence is given to support
this claim.)

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 18

HOMEAWAY FINANCIALS
FINANCIALS

Annual

Quarterly

USD FY, 2013 FY, 2014

Revenue 346.5m 446.8m

Revenue 24% 29%

growth, %

Cost of goods 54.6m 67.6m

sold

Gross profit 291.9m 379.2m

HomeAway, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)

September December
30, 31,
2015 2014
Assets
Current assets:
Cash and cash equivalents $ 301,293 $ 292,325
Short-term investments 618,343 520,844
Accounts receivable, net of allowance for doubtful
accounts of $633 and $663 as of September 30, 2015 24,019 23,189
and December 31, 2014, respectively
Income tax receivable 1,680 1,900
Prepaid expenses and other current assets 18,269 17,913
Deferred tax assets 9,384 8,774
Total current assets 972,988 864,945
Property and equipment, net 60,773 56,173

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 19

 Goodwill 460,049 493,671
Intangible assets, net 58,003 70,456
Non-marketable investments 39,549 35,285
Deferred tax assets 880 1,545
Other non-current assets 6,295 8,053
Total assets $ 1,598,537 $ 1,530,128
Liabilities, redeemable noncontrolling interests and
stockholders' equity
Current liabilities:
Accounts payable $ 7,487 $ 8,281
Income tax payable 907 1,344

Accrued expenses 50,446 50,255

Deferred revenue 193,769 170,522

Total current liabilities 252,609 230,402

Convertible senior notes, net 329,905 316,181
Deferred revenue, less current portion 2,981 3,179
Deferred tax liabilities 24,376 26,624
Other non-current liabilities 19,817 12,192
Total liabilities 629,688 588,578

Redeemable noncontrolling interests 9,033 9,742

Stockholders' equity
Common stock 10 9
Additional paid-in capital 1,076,292 1,022,586
Accumulated other comprehensive loss (60,608) (28,053)
Accumulated deficit (55,878) (62,734)
Total stockholders' equity 959,816 931,808
Total liabilities, redeemable noncontrolling interests
$ 1,598,537 $ 1,530,128
and stockholders' equity

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 20

LEADERSHIP

John Kim, President

John Kim, president of HomeAway, oversees strategic development and management of one
of the world’s leading alternative accommodations sites. In an exploding marketplace, Kim
plays a key role in guiding HomeAway's overall vision and direction, overseeing key
organizations that operate a marketplace with over two million unique places to stay in 190
countries. Since Kim took leadership in 2016, HomeAway has been globally recognized by
Business Insider as being one of the top 25 tech companies everyone wants to work for right
now.

Jeff Hurst, Chief Commercial Officer

Jeff Hurst serves as HomeAway’s chief commercial officer where he oversees strategy and
growth businesses, including business development, global revenue, e-commerce initiatives
and HomeAway’s activities in Asia Pacific.

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 21

COMPARATIVE ANALYSIS OF HOTEL INDUSTRY –DELHI SCHOOL OF MANAGEMENT -DTU 22